Are bank account bonuses worth it?
If you’re already shopping for a new checking or savings account, it’s worth reviewing bonus offers that can help you earn extra cash. You may have to jump through several hoops to receive the bonus, such as funding your account immediately, keeping your account open for a set time, meeting a minimum daily account balance or receiving a set amount and number of monthly direct deposits within a specific period.
Remember the monthly fees associated with any account you’re considering, as they can wipe out your gains. If, for example, you get a $200 bonus for an account that charges a $25 monthly fee, and you’re unable to waive the fee, you’ll wipe out your bonus gains in eight months.
Also, be sure to weigh other factors besides bonuses when comparing accounts. For example, a savings account with a high annual percentage yield and a low bonus could earn you more over time.
Beware that if you’re willing to meet the requirements for only a short period and plan on closing the account after you get the bonus (known as bank account churning), you may be charged an early termination fee. In addition, bank bonuses are considered taxable income, so you might find yourself with a tax bill at the end of the year.
How to choose the best bank with a sign-up bonus
As you begin your search, ask yourself the following questions:
- Will I be more comfortable with the option to speak with someone in person?
- Are there reasons for me to visit a branch in person, or can I handle my transactions online?
- How important is having the latest technological innovations available in a bank?
- How much do I travel, and what type of banking tools do I need to access when I’m traveling?
- How can a financial institution best help me reach both my short- and long-term financial goals?
- Can I keep enough money in the account to maintain a minimum deposit or balance without hurting my finances?
Answering the above questions should help decide whether a traditional bank, online bank or something in between is the best financial fit for you. Once you have your shortlist, the next step is to compare the services each institution offers and make note of any fees you may be charged. Features to look for include:
- Free checking account
- Savings accounts, money market accounts and/or certificates of deposit
- Ability to interface with peer-to-peer transaction services such as Zelle
- Overdraft protection
- Loan products
- Wealth management and/or professional advisory services
FAQs
Capital One requires two direct deposits of $500 each within the first 75 days to earn $250. This offer has straightforward and achievable requirements and takes two months or less to pay out. In addition, Capital One doesn’t charge monthly fees that can eat away at your bonus.
Yes. The IRS treats welcome bonuses as taxable income. Your bank may send you 1099-INT or 1099-MISC tax form, depending on the bonus amount, that will help you complete your taxes.
Yes. Our list here is by no means exhaustive, and we base our picks on the bonus amount and accessibility. Some banks didn’t make this list because the bonus amount was too low or too cumbersome to obtain.
Generally, it’s better to go with a bank offering a higher APY than a higher bonus. A bonus is a one-time event, while banks offering competitive APYs are more likely to continue offering above-average interest for your savings (even once rates dip).Â
Sometimes, you can find a welcome bonus offer at a bank that also has a competitive APY on a savings or checking account. SoFi, for example, is offering a bonus of up to $300 and a checking and savings account that earn 0.50% APY and up to 3.80% APY, respectively, once you set up a direct deposit.
You can, but it’s not a strategy we recommend. Criteria for obtaining a bonus can be cumbersome, requiring you to keep the account open for a certain length of time, make qualifying direct deposits (sometimes in the thousands) and maintain daily balance amounts. Many checking and savings accounts also charge monthly maintenance fees.
If you plan to close a new bank account soon after receiving the bank bonus — a practice known as account churning — you could incur early account closure fees. We don’t recommend this strategy either because the penalties charged will take away from the bonus earned.Â
Also, some banks will disqualify you from earning a bonus offer if you’ve had a negative balance in the past. Chase, for example, disqualifies customers from bonus offers if they’ve had a negative balance within the last three years.
If you do decide to try your luck scoring welcome bonuses by opening multiple accounts, it’s important to know that you’ll owe taxes on any money earned through these signup bonuses.
Methodology
CNET regularly reviews and tracks account bonus offerings at banks, credit unions and financial institutions with nationwide access. The Federal Deposit Insurance Corporation or National Credit Union Administration insures each bank up to $250,000 per person, account category, and institution.
The banks, credit unions and neobanks we reviewed include Affirm Savings, Alliant Credit Union, Ally, America First Credit Union, American Express High Yield Savings Account, Axos High Yield Savings, Bank of America Advantage Savings, Bank of the West, Bank5 Connect, Barclays, Bask Bank, Bread Savings, BrioDirect High-Yield Savings, Capital One 360 Checking, Charles Schwab, Chase Premier Savings, Chime, Citibank, Citizens Online Savings Account, Colorado Federal Savings Bank, Consumers Credit Union, Discover, First Internet Bank of Indiana, LendingClub, Live Oak Bank, M&T Bank, Marcus, My Banking Direct, Nationwide My Savings, Navy Federal Credit Union, NBKC, OneUnited Bank, PenFed CU, PNC, Popular Direct Select Savings, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sally Mae Smarty Pig, Santander Bank, Synchrony, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Varo, Vio and Wells Fargo.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
